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Cabot Microelectronics Corporation Reports Strong Results for Third Quarter of Fiscal 2013

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  • Revenue of $110.0 Million, Up Approximately 10 Percent Sequentially
  • Gross Profit Margin of 49.7 Percent of Revenue, Up 150 Basis Points Sequentially
  • Earnings Per Share of 65 Cents, Up From 40 Cents in Prior Period

AURORA, Ill., July 30, 2013 (GLOBE NEWSWIRE) -- Cabot Microelectronics Corporation (Nasdaq:CCMP), the world's leading supplier of chemical mechanical planarization (CMP) polishing slurries and a growing CMP pad supplier to the semiconductor industry, today reported financial results for its third quarter of fiscal 2013, which ended June 30, 2013.

Total revenue during the third fiscal quarter was $110.0 million. This reflects an increase of 9.6 percent from the prior quarter, on solid demand for the company's products, as semiconductor industry demand strengthened following relatively soft conditions during the first half of the fiscal year, as well as growth in demand for the company's QED products. The company achieved gross profit margin of 49.7 percent of revenue, which represents increases of 200 and 150 basis points year-over-year and sequentially, respectively. Diluted earnings per share were $0.65, compared to $0.40 in the prior quarter. The company's balance sheet reflects a cash balance of $201.6 million, $13.3 million higher than in the prior quarter, and $166.3 million of debt outstanding as of June 30, 2013.

"We are pleased with our strong financial performance this quarter, which we believe reflects the continued successful execution of our strategic business initiatives, coupled with strengthening of overall semiconductor industry demand that we had anticipated to occur during the quarter," said William Noglows, Chairman and CEO of Cabot Microelectronics. "Our revenue grew by almost 10 percent sequentially, and notably, revenue from our Pads business grew by 14 percent compared to the prior period. Additionally, we achieved strong profitability as our gross margin of 49.7 percent of revenue and diluted earnings per share of 65 cents were each at the highest quarterly levels since the December quarter of 2010. Heading into what is typically a seasonally strong fourth fiscal quarter, I am confident that we are well-positioned to continue to develop and deliver innovative, high-quality solutions to our customers and continue to provide value for our shareholders."

Key Financial Information

Total third fiscal quarter revenue of $110.0 million represents a 4.9 percent decrease from the record revenue of $115.7 million achieved in the same quarter last year, and a 9.6 percent increase from $100.4 million reported last quarter. Compared to the same quarter last year, revenue from the company's aluminum CMP slurry products increased, while revenue from all other major business areas decreased. Compared to the prior quarter, revenue from all of the company's business areas increased except for revenue from slurries for data storage applications. Year to date revenue of $316.9 million is essentially even with the prior year's.

Gross profit, expressed as a percentage of revenue, was 49.7 percent this quarter. This is higher than both the 47.7 percent of revenue reported in the same quarter a year ago, and 48.2 percent last quarter. Compared to the year ago quarter, gross profit percentage increased primarily due to lower manufacturing costs and benefits associated with a weaker Japanese yen versus the U.S. dollar, partially offset by lower sales volume. The increase in gross profit percentage versus the previous quarter was primarily due to lower fixed manufacturing and logistics costs, and the favorable impact of the weaker Japanese yen. Year to date, gross profit represented 48.3 percent of revenue, which is above the company's full fiscal year guidance range of 46 to 48 percent of revenue, which remains unchanged.

Operating expenses, which include research, development and technical, selling and marketing, and general and administrative expenses, were $32.4 million in the third fiscal quarter, or $1.2 million less than the $33.6 million reported in the same quarter a year ago, primarily due to lower depreciation expense, clean room materials expense and staffing related expenses. Operating expenses were $2.0 million lower than the $34.4 million reported in the previous quarter, primarily due to lower staffing related costs. Year to date, total operating expenses were $100.2 million. The company's full year guidance for operating expenses remains unchanged at $132 million to $136 million.

Net income for the quarter was $15.5 million, or 17.0 percent higher than the $13.2 million reported in the same quarter last year, and 64.5 percent higher than the $9.4 million in the previous quarter. Compared to the same quarter last year, net income was higher primarily due to a higher gross profit margin, a favorable impact of the weaker Japanese yen reflected in other income, lower operating expenses, and a lower effective tax rate, partially offset by lower revenue. The effective tax rate in the third fiscal quarter decreased primarily due to the company's recent election to permanently reinvest the earnings of its Japan subsidiaries. Compared to the prior quarter, net income was up $6.1 million mainly due to the company's higher level of sales, higher gross profit margin, lower operating expenses and a lower effective tax rate. Year to date, net income of $34.6 million was up 18.6 percent compared to the prior year.

Diluted earnings per share were $0.65 this quarter, which includes a $0.05 benefit associated with the company's permanent reinvestment election in Japan, up from $0.55 reported in the third quarter of fiscal 2012 and up from $0.40 reported in the previous quarter. Year to date, diluted earnings per share of $1.46 were up 17.7 percent compared to last year.

CONFERENCE CALL

Cabot Microelectronics Corporation's quarterly earnings conference call will be held today at 9:00 a.m. Central Time. The conference call will be available via live webcast and replay from the company's website, www.cabotcmp.com, or by phone at (866) 318-8612. Callers outside the U.S. can dial (617) 399-5131. The conference code for the call is 62171186. A transcript of the formal comments made during the conference call will also be available in the Investor Relations section of the company's website.

ABOUT CABOT MICROELECTRONICS CORPORATION

Cabot Microelectronics Corporation, headquartered in Aurora, Illinois, is the world's leading supplier of CMP polishing slurries and a growing CMP pad supplier to the semiconductor industry. The company's products play a critical role in the production of advanced semiconductor devices, enabling the manufacture of smaller, faster and more complex devices by its customers. The company's mission is to create value by developing reliable and innovative solutions, through close customer collaboration, that solve today's challenges and help enable tomorrow's technology. Since becoming an independent public company in 2000, the company has grown to approximately 1,050 employees on a global basis. For more information about Cabot Microelectronics Corporation, visit www.cabotcmp.com or contact Trisha Tuntland, Manager of Investor Relations at 630-499-2600.

SAFE HARBOR STATEMENT

This news release may include statements that constitute "forward looking statements" within the meaning of federal securities regulations. These forward-looking statements include statements related to: future sales and operating results; company and industry growth, contraction or trends; growth or contraction of the markets in which the company participates; international events, regulatory or legislative activity, or various economic factors; product performance; the generation, protection and acquisition of intellectual property, and litigation related to such intellectual property; new product introductions; development of new products, technologies and markets; natural disasters; the acquisition of or investment in other entities; uses and investment of the company's cash balance; financing facilities and related debt, payment of principal and interest, and compliance with covenants and other terms; the company's capital structure; and the construction and operation of facilities by Cabot Microelectronics Corporation. These forward-looking statements involve a number of risks, uncertainties, and other factors, including those described from time to time in Cabot Microelectronics' filings with the Securities and Exchange Commission (SEC), that could cause actual results to differ materially from those described by these forward-looking statements. In particular, see "Risk Factors" in the company's quarterly report on Form 10-Q for the quarter ended March 31, 2013 and in the company's annual report on Form 10-K for the fiscal year ended September 30, 2012, both filed with the SEC. Cabot Microelectronics assumes no obligation to update this forward-looking information.

CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and amounts in thousands, except per share amounts)
Quarter Ended Nine Months Ended
June 30, March 31, June 30, June 30, June 30,
2013 2013 2012 2013 2012
Revenue $ 109,968 $ 100,364 $ 115,678 $ 316,865 $ 317,036
Cost of goods sold 55,359 52,019 60,462 163,872 166,747
Gross profit 54,609 48,345 55,216 152,993 150,289
Operating expenses:
Research, development & technical 15,149 15,073 15,415 45,538 43,241
Selling & marketing 6,470 7,046 7,458 20,625 22,228
General & administrative 10,776 12,287 10,695 34,017 38,773
Total operating expenses 32,395 34,406 33,568 100,180 104,242
Operating income 22,214 13,939 21,648 52,813 46,047
Interest expense 907 872 955 2,732 1,348
Other income (expense), net 248 463 (864) 1,565 (663)
Income before income taxes 21,555 13,530 19,829 51,646 44,036
Provision for income taxes 6,062 4,110 6,587 17,030 14,849
Net income $ 15,493 $ 9,420 $ 13,242 $ 34,616 $ 29,187
Basic earnings per share $0.68 $0.41 $0.57 $1.51 $1.28
Weighted average basic shares outstanding 22,951 22,974 23,120 22,897 22,778
Diluted earnings per share $0.65 $0.40 $0.55 $1.46 $1.24
Weighted average diluted shares outstanding 23,776 23,871 23,939 23,729 23,547
CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands)
June 30, September 30,
2013 2012
ASSETS:
Current assets:
Cash and cash equivalents $ 201,611 $ 178,459
Accounts receivable, net 55,921 53,506
Inventories, net 64,531 66,472
Other current assets 19,162 19,451
Total current assets 341,225 317,888
Property, plant and equipment, net 109,777 125,020
Other long-term assets 74,384 74,917
Total assets $ 525,386 $ 517,825
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 14,778 $ 19,542
Current portion of long-term debt 12,031 10,937
Capital lease obligations -- 2
Accrued expenses, income taxes payable and other current liabilities 32,612 32,738
Total current liabilities 59,421 63,219
Long-term debt, net of current portion 154,219 161,875
Capital lease obligations, net of current portion -- 19
Other long-term liabilities 8,925 9,121
Total liabilities 222,565 234,234
Stockholders' equity 302,821 283,591
Total liabilities and stockholders' equity $ 525,386 $ 517,825

CONTACT: Trisha Tuntland Manager of Investor Relations 630-499-2600

Source:Cabot Microelectronics Corporation